Economy

I shared this nagging worry with a friend: that I feel growing paralysis through an overwhelming sense of contingency, on the fact that my – our – future is dependent on the historical actions of banks over which, apparently, we had no control; on the current plans of – God help us – Nicolas Sarkozy; and on the outcome of a Greek referendum (cancelled at the time of writing – but who knows what the day will bring?).

Our worries came to fruition this week. Monday began with a massive Yentervention that pushed the Dollar all the way from 76 to 77.6 in less than 24 hours. This was followed by a surprise announcement from Greek Prime Minister George Papandreou ("G-Pap"). He revealed plans for a national referendum on last week’s proposed expansion of the EFSF and the 50% “haircut” for holders of Greek debt. Completing the trifecta for the bears, in its statement on Wednesday, the Federal Reserve didn’t include additional stimulus for our ailing economy, despite Bernanke’s hinting about the potential for more money printing in late October. President Obama’s $60Bn infrastructure bill being blocked in the Senate did nothing to boost bullish sentiments.

The financial bailout zombified much of the economy. Businesses that should have closed their doors were able to keep the lights on. Managements that proved they were incompetent were given bonuses and kept on the job. Industries that needed to be shaken up became even further entrenched.

Households have reduced debt by $549 billion since 2007, mostly by cutting mortgages through defaults and paying down credit cards. During that time, the federal government has added more than $4 trillion in debt, pushing the country's total borrowing to a record $36.5 trillion, excluding the financial industry, according to the Federal Reserve.

"Government will eventually need to reduce the deficit," says Susan Lund, research director at McKinsey Global Institute, part of the business consulting firm. "But it's a very difficult balancing act to avoid withdrawing stimulus too soon while stopping before you borrow too much."

The government of Ms. Dilma Rousseff has not been standing idly by as the rest of the world has been focused on debt woes. The central bank has already cut central bank rates 0.5 percent to 12.0 percent, a move that is expected to be repeated later this year and next year down to a (still eye-wateringly high) 10.5 percent by mid-next year, according to the EIU Viewswire report. This in spite of consumer inflation running at 7.3 percent year-on-year in September, well above the target of 4.5 percent and with a 14-percent increase in the minimum wage in the pipeline for January.

The October US non-farm payrolls, due at 12.30pm UK time, are forecast to rise by 95,000, according to a Reuters poll. That's a slight improvement to build on September's rise in employment. But still the unemployment rate of 9.1% has more than doubled from its pre-crisis low of 4.4% in 2007, notes M&G's Anthony Doyle in his latest post on the Bond Vigilantes blog.

After three years of harsh austerity measures, the country's economy is now showing signs of health despite the current global financial and economic crisis that has Greece verging on default and other eurozone states under pressure.

Energy

A NASEI source speaking off the record disclosed that NASEI would be a major supplier for power equipment in the Rural Information Technology Centers (RITCs), commenting, "They will be our major supplier. The National Information Technology Development Agency has inspected their plant and they have tendered (for provision contracts). With the solar panels, we will be assured of constant power supply there. Despite the fact that we are not in the same ministry, there is still high synergy between us."

The Eagle Butte mine, which belongs to Alpha Natural Resources, is barely a mile north of the Gillette airport. It is one of a trio of virtually suburban mines that make up the northernmost of the three distinct mining clusters in the Powder River Basin. I arranged to take a tour of Eagle Butte, meeting my guide at the Flying J truck stop in downtown Gillette. She was a chipper junior high school P.E. teacher named Shannon, who said she had been working for Alpha for the past eight summers. It’s the third-biggest coal company in the nation, she told me proudly. (Peabody Energy is number one; Arch Coal is second.) She promised lots of other "fun facts," most of which seemed to involve extremes of size, weight, and volume.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

"Italy’s record bond yields are sending the nation down the same path taken by Greece, Portugal and Ireland in the days before they were forced to seek rescues.

Italy’s 10-year notes traded above 5.5 percent for 40 days before breaching the 6 percent mark on Oct. 28 and reaching as much as 6.68 percent today. The bailed-out nations followed a similar trajectory, consistently averaging above 6 percent for about a month before crossing the 6.5 percent barrier. After that, it took an average of 16 days for yields to pass the unsustainable 7 percent level."

"But Reed is equally apocalyptic about the consequences of failing to pursue his ballot-measure plan, much of which he argues is legally beyond question. He wants the city to formally declare a fiscal emergency to strengthen its case. But he concedes that courts may strike half the $60 million in savings he hopes his measure would deliver next year, when the city faces an 11th straight deficit, which could climb to $115 million.

"It's a risk we have to take," Reed said. "We're talking about fiscal insolvency.""

"Retirement trust funds created to cover billions of dollars in medical costs for unionized workers and their families are running short, forcing the funds to cut costs, trim benefits, and ask retirees and companies to pony up more cash.

The biggest such fund—a trio of United Auto Worker trusts covering benefits for more than 820,000 people, including Detroit auto-maker retirees and their dependents—is underfunded by nearly $20 billion, according to trust documents filed with the U.S. Labor Department last month."

It's simple. We can all agree that, whatever else must be done, we must prosecute the lawbreakers and we must start at the top. Once that's underway, we can coalesce around other necessary actions. Prosecute the fraud!

Good question! The fraud laws already exist (and they've been blatantly broken), so we don't have to demand they be written (or worse, we don't have to grab the offenders ourselves and try them on the street!). A number of elected and appointed officials are already in place who by themselves as individuals could take courageous steps to begin the process. ( There are probably more, but there are at least these: President, US Attorney General, NY Attorney General, SEC Chair, FBI Director. Even a local D.A. could prosecute mortgage fraud in his/her county/city.) But, so far these elected and appointed officials (from the President on down) have not initiated any of these actions. I say we just keep beating the drum ("Prosecute the fraud!") until we get someone in office to get moving, or until we get new people into office who made promises to prosecute and then keep that promise. If OWS would start demanding this, I think it would grow quickly and the current officials would act or we could easily unseat them for not acting. If I was KING, I would appoint Bill Black (currently a professor, but helped get 1,000 felony convictions in the '80's Savings and Loan crisis) as Attorney General or Special Prosecutor and give him every resource he asked for. Just appointing him would cause 500 people to flee the country to non-extradition countries! For me, this would be a litmus test to put to any US Senator or Representative candidate or Presidential candidate I would vote for. It would be an irresistable force: liberals and conservatives, OWS and Tea Party people, Democrats and Republicans, young and old, rich and poor could all agree and demand the same thing. PROSECUTE THE FRAUD!

Re" "What do you think?"
It would be great if the world works via idealistic principles and truth/justice prevailed. But, forget about it. The rich by definition are well financed and well experienced. This is nothing new. Even attempts to point out injustice issues get quickly drowned by the power of the 1% (4 protesters got injured at DC OWS this week, so the police are saying that the OWS movement has become violent and somehow protesters are injuring OTHERS - just the opposite). It is hopeless. Just read some history. Even the US revolution was about land owners who fought like hell to omit the majority (non-land owners) from having any rights. Instead of dreaming for justice that will never come, we need to develop community/interpersonal relationships and build self-sustaining local communities that do not need the 1% for "financing" or other such stuff. If there were any justice, the present government would get replaced with a new government but likely would become something that is far worse. But if we mostly are self sufficient, we can thrive. Nice thing about modern society: we have tons of excellent technology to become self sufficient and develop communities easier than ever before (internet, solar electricity, extremely cheap and easy to use metal work tools, electronics tools, etc aquaponics etc) so let's just DO IT. Much of the present website provides guidance.......... OK, that is what I think. Anyone agree?

To prosecute the fruad, you usually need to enforce the existing laws on the books. Rarely do you need more legislation: you just need the will to enforce law, unless it's a new area like regulating Credit Default Swaps or CDOs. My votes this American election cycle will concenrtate on trying to get people in any and every office with the stones to stand up to the banksters.

My first candidates for prosecution are anyone in congress who personally profited from putting all these obviously bad mortgages on the Taxpayer's back via Fanie Mae and Freddie Mac. Dodd and Frank, for starters.

Re" "What do you think?"
It would be great if the world works via idealistic principles and truth/justice prevailed. But, forget about it. The rich by definition are well financed and well experienced. This is nothing new. Even attempts to point out injustice issues get quickly drowned by the power of the 1% (4 protesters got injured at DC OWS this week, so the police are saying that the OWS movement has become violent and somehow protesters are injuring OTHERS - just the opposite). It is hopeless. Just read some history. Even the US revolution was about land owners who fought like hell to omit the majority (non-land owners) from having any rights. Instead of dreaming for justice that will never come, we need to develop community/interpersonal relationships and build self-sustaining local communities that do not need the 1% for "financing" or other such stuff. If there were any justice, the present government would get replaced with a new government but likely would become something that is far worse. But if we mostly are self sufficient, we can thrive. Nice thing about modern society: we have tons of excellent technology to become self sufficient and develop communities easier than ever before (internet, solar electricity, extremely cheap and easy to use metal work tools, electronics tools, etc aquaponics etc) so let's just DO IT. Much of the present website provides guidance.......... OK, that is what I think. Anyone agree?

I like your vision, but it may not be feasible. The World Trade Organization trumps national and certainly local sovereignty. If local trade cuts into corporate profits, it will likely be eliminated.

//Public health is losing out to corporate profits in other WTO regulations as well. The pharmaceutical industry heavily influenced the WTO's pact on intellectual property rights so it mirrors U.S. laws granting monopolies to individual patent holders for extended time periods. Now Third World countries trying to purchase or develop generic drugs for internal consumption are being threatened with WTO action if they proceed. If governments want those drugs to save the health and lives of their people, they must pay whatever price demanded by the transnational corporation holding the patent.

Another ruling was an attack on the poor, devastating small farmers in favor of transnational corporations. As part of a "trade, not aid" treaty the European Union has with its former colonies, the EU guaranteed some Caribbean countries it would buy a certain amount of bananas from them. The U.S., on behalf of the Chiquita Banana Corporation, filed a complaint with the WTO claiming this guarantee was a trade baffler to it selling bananas in Europe. The Caribbean growers, small-scale farmers who own and work their land, are hardly competition for Chiquita's large plantations, but the EU guarantee gives them a chance to make a decent living. Nonetheless, the WTO decided the practice was a trade barrier and imposed sanctions on the EU.

The fact that the U.S. grows no bananas--Chiquita's are grown in Latin America--shows that the WTO process is geared not to protect national interests, but the profits of transnational corporations. In each of these cases and running through everything the WTO does, is the abdication of national sovereignty--each participating country gives up the right to make laws governing its own affairs. It doesn't matter the people of a country vote a pass laws to protect their environment, health or local economy. a ruling by an obscure, nameless three person WTO panel on the the other side of the planet trumps their democratic decision.//

However the whole point of local community industry is that such is (or easily can be) off the radar and out of the larger stream of commerce. The US or GATT does not know or regulate my transactions between me and my children when we work on the garden, even when we quantitate our respective contributions. In the old days when the neighborhood helped the newcomer raise a barn or pull in the harvest, the government did not tax such efforts. When I build a device or electric bike for my neighbor and he gives me some food, that is not taxed or controlled by some government. When I build a cultivator or lend one to my neighbor, that is not taxed etc. At some point I expect to provide electricity to neighbors. If some government finds out and tries to tax me, then I will create a suitable legal organization (without bankster involvement) in defense. This is the way to go.

To the extent we dont trust each other and get unfamiliar outsiders involved, the banksters and their government enforcers take control of us. Friendships and community/family are our best defenses. That is a major reason why the answer to THE PROBLEM is in building local sustainable industry. On this topic, I have to say how amazed I am that technology has made it extremely easy to build and repair THINGS on the individual level. No one is talking about this or apparently doing anything. We need to get over the prejudice against using our hands. I build stuff all the time and am treated as low class by my neighbors because they notice that I do things with my hands (despite my having a higher education and income than them). This has to change as it seems to be the biggest impediment to creating local sustainable communities.

The history of Japan is very interesting from this perspective. From the Samurai days, people in the countryside learned to keep quiet when governmental officials came around. Even now it is amazing how much freedom the Japanese have from governmental control in the countryside. Partly for this reason I have decided to locate there, amidst copious, low cost beautiful farmland and among other hardworking down to earth friendly people who respect building things with their hands and their tools.